A Critical Analysis Of Tax A Voidance In Tanzania Mainland: The Law And Practice Of Anti-A Voidance Provisions Under The Income Tax Act No.Ll Of 2004

ABSTRACT

It is expected by any society that they pay tax to raise government revenues so that in return the

society is provided with all the services from the government. These are social services.

maintaining law and order, ensuring defense and hosting other undeiiakings which the state feels

are better be provided by itself, like health services. Tax payment is not a new idea in Tanzania

mainland because it has had taxation system since the turn of the century all with the aim of being

a handmaid for raising revenues to meet government expenditure.

As stated above the society have their expectations when paying tax, however there are many tax

.payers who evades taxes not withstanding that there are penalties for that act simply because they

feel that the government is not performing well in providing the society with social needs and end

up using revenue on other issues. Not all citizens have positive attitude to of paying tax. This may

be caused by many factors most of which are caused by the government itself by failing to

provide social services to the satisfaction of the citizens. Therefore citizens would wish to use any

means either to reduce the Tax burden or evade paying tax.

The desire to avoid payment of tax need not bring a surprise particularly in developing countries

like Tanzania. In the usual case it will amount to no more than a sensible use of the available

exemptions and reliefs which are provided in all tax legislation. In other cases, where sums

avoided are greater, the methods adopted by the tax planning industry to escape the fiscal net may

take on a complexity that is beyond the comprehension of most individuals and may involve

schemes which are divorced from reality. Tax avoidance is the use of legal methods to modify an

individual's financial situation in order to lower the amount of income tax owed. This is generally

accomplished by claiming the permissible deductions and credits. This practice differs from tax

evasion, which is illegal.

In this study, most of the issues on tax avoidance have been addressed and analyzed including the

loopholes that still exist to attract taxpayers to plan to avoid tax and solutions to problem.

Reviewing tax laws regularly is of most importance so as to be in line with the fast changing

world in business environment like e-commerce, and different means of money transfers like the

mobile banking. There is a need to have Tax Laws free from ambiguities in that they should not

create loopholes that will attract more and more Tax avoidance acts as it is with transfer pricing provision under the Income tax Act.